Apollo Utilities, Incorporated paid a dividend of $2.12 yesterday (D0 = $2.12). If this dividend is expected to grow at a constant rate of 6% per year for the next 10 years and shareholders of Apollo use a required rate of return of 11%, what will the expected dividend be in year 10 (D10 = ? )? (a) $ 6.02 (b) $ 3.79 (c) $42.40 (d) $ 3.45 (e) $44.94

(b) $ 3.79

Explanation:

This can be calculated using the following simple formula:

Current dividend = (1 + Growth rate) × Previous dividend.

The formula in the following table:

Year   1 + Growth rate   Previous dividend ($)   Current Dividend ($)  

0             -                                 -                                       2.120  

1          1.060                                2.120                            2.247  

2         1.060                                2.247                            2.382  

3         1.060                                 2.382                           2.525  

4          1.060                                2.525                           2.676  

5          1.060                                2.676                           2.837  

6          1.060                                 2.837                           3.007  

7          1.060                                 3.007                           3.188  

8          1.060                                 3.188                            3.379  

9          1.060                                 3.379                           3.582  

10         1.060                                 3.582                           3.797

Therefore, D10 is equal to 3.797.

you will have $2593.74 in 10 years if you set aside $1,000 at 10%

you will have $9321.91 in 20 years if you set aside $2000 at 8%

you will have $1469.32 in 5 years if you set aside $1000 at 8%

you will have $1296.87 in 10 years if you set aside $500 at 10%

you will have $239.66 in 15 years if you set aside $100 at 6%

you will have $4660.96 in 20 years if you set aside $1000 at 8%

answer; organization;